While making investments in the stock markets, you need a solid plan, setting your moves very carefully as it involves your hard earned money and you would not want to risk losing all of it. This is where financial advisers can come to your rescue. A good certified financial advisor will not only offer you data driven recommendations, but will also help you in understanding the market according to your preferred trading or investment style.
A stock broker might not extend this facility to you since they are mostly involved in the execution part of the trade. Also, each stock broker earns a commission from you every time you enter or exit a trade. Hence, he/she would only urge you to trade more and more without actually having a look at the other factors related to the trade like risk appetite and your investing capacity.
So, it is important that you take help of a SEBI registered financial adviser. While anyone can be your financial adviser, including your best friend, partner, love of your life, your boss, or even your neighbor, to get the best and most accurate trading advice, you should always keep in mind the following factors which should give you an idea of the things to keep an eye out for while choosing the financial planner for intraday trading.
1. Assurance of Returns or Profits is Big NO
2. You need to know about the associated risks
3. The recommendations and advice need to be Research Based
4. Fee only advisors with no conflict of interest are the best
5. Understand your needs from an advisor
6. You should always choose an experienced and well recognized financial advisor
7. Certification and Regulator Compliance should be checked
Markets are volatile and unpredictable and you can never be guaranteed of returns from the money you invest. If you have been assured of any profits or returns in any manner, you should immediately walk away from the financial adviser. A genuine advisor would never even speak about any guarantees or commitments of returns because the stock market is highly volatile and risk is always evident in any investment that is made. It is impossible to assure any profits in the market. If you want to assess the advisor, you should look at their past performance and existing data as a metric for making assessment of a future performance.
Stock market investments always bear market risks. Investment in markets is never free from risk. It is forever there, irrespective of the period of investment or investment amount. A genuine financial advisor would ensure that you have proper clarity on all the risks associated with your stock market investments and will help you to understand the available options to mitigate the risks (within feasible limits). If the advisor does not tell you about the associated risks, you should consider this as a red flag and back off from the deal.
If a person is giving you advice regarding investments, especially in stock market, without any sound logic or science to it, then it simply cannot be trusted. It is a waste of time and money if you are considering and implementing on the advice of financial advisors who is giving trading signals in intraday based on assumptions or instincts.
If you ask a financial advisor about the type of trading signal and the reason for the buy or sell recommendation, and the advisor replies ambiguously, then you should consider moving away from the advisor.
Also, make sure you understand whether the recommendations are personal calls being given by sales executives or they are provided by researchers.
There are many execution service providers such as stock brokers who can claim to be your financial advisors and will probably try to give trading signals of stocks which help them generate more commission. But you need to understand that in their recommendations, there will always be a vested interest. Such stock brokers who actively manage your money and with whom you deposit your investment capital, will always try to make sure their commission is high and will ask you to trade beyond your capacity, even if it is not the best option for you.
On the contrary, a fee-only advisor charges for the analysis and knowledge regarding stock market movements in intraday, your financial goals and risk appetite and then suggest the right stocks for you.
As per Indian regulations, advisers are also not authorized to offer any other services apart from advisory services. If you have been committed or assured of a service which is not under the norms of advisory services, then you should back off and seek out other advisors. Never fall into such a trap and risk your investments.
There are many different types of advisors whose services you can take. There are robo-advisors, advisor tools and programs and tradition human advisors. Each of these categories are different and will have a different approach of meeting your requirements. Before you actually enlist the help of an investment advisor, understand as to what is your requirement from the advisor and which advisor can serve you the best. May be the recommendations of an AI driven software can help you better, or maybe you need the personal touch of being able to communicate with your advisor during market hours for intraday trading calls. It depends on you and your requirements. So, it’s important to assess your needs first and then choose wisely.
If you finally figure out your needs that need to be fulfilled through a financial advisor and have a multitude of options before you, then you should always go with the advisor which has the most experience and a performance track record. It is easy to predict the future performance of an advisor’s recommendations based on their past performance. You can look at previous client feedbacks and testimonials, media coverages etc. to gauge the performance of the advisor you have shortlisted. You can also ask for the ROI they have delivered to their clients in the past in intraday trades.
There are extremely strict regulations with respect to financial advisors. First you should read up about that and then check if your financial advisor follows these to the book or not. It is important that you engage with a financial adviser that is certified and compliant with the regulations. Working with a certified advisor is a safer approach because it indicates that the processes are compliant with the guidelines and there is a possible recourse in the event that a mishap has occurred.
There have been cases where advisors that are non-compliant have risked the investments of their customers by not following the protocols that have been defined. It is better to work with a certified and compliant financial adviser. While working with certified IAs, such mishap can also happen. However, the intensity or the degree with which the mishap hits the client is relatively low.
To sum up, choosing the right financial advisor should be a well thought of step and especially in intraday trading, it is extremely important that your advisor is unbiased, fully compliant and registered. In Intraday trading, facing loss is always possible. But, you should choose an investor who does not panic in face of losses and gives you trading signals based on a proper analysis.
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